tv Fast Money Halftime Report CNBC January 7, 2016 12:00pm-1:01pm EST
exchange. we got an upgrade, for instance, of southwest airlines over at morgan stanley today, taking its equal weight, saying pricing is getting better. we saw a fair hike this week with low oil. >> pricing for the company is getting better. >> not for the consumer. interesting session tonight in china. let's get over there. >> guys, thanks so much. welcome to "the halftime show." joe teranova is here along with stephen weiss, josh brown. also from new york today, kathy lien, managing director. our game plan looks like this. target practice. when will apple shares bottom? the top ranked analyst who said on this very program that the company's best days were behind it. once again, joins us live. bullfight. our desk debates famed market watcher jeremy segal, who says stocks could still rise 10% this
year. is that really possible? we begin with a continued selloff in global markets with a picture at this hour a bit different from where this day began. here is where we stand on wall street. stocks coming back quite a bit after plunging to a three-month low right out of the gate. once again, china, front and center. trading there lasting less than a half-hour before circuit breakers kicking in. no surprise, u.s. stocks not reacting well to that. nor did they react well, guys, to the continued, steve, devaluation of the currency. yes, the dow is only down 200 now, and i say only because it was down more than 300 right from the get-go. >> yeah. and it's pretty scary. happened at the beginning of the year. last january were not good periods. but they didn't have the velocity, downward velocity, volatility, so early. now, the issue is with the currency, with the yuan continuing to be devalued -- >> that's the biggest issue? >> to me, that is the absolute biggest issue. it's even bigger because china
doesn't want it to happen. so it's really a confidence issue that the rest of the world has in china. china is trying to support the currency, but china doesn't know what to do. they're teenagers when it comes to capitalism. they're stubborn. they don't ask for help. and they're inexperienced. so instead of coming to us and going to the ecb, and going to developed countries' central banks to ask for help, as we do, as draghi does, as is convention, they're trying to do it on their own and they don't know what to do. so there's a loss of confidence in the economy, a major loss of confidence. you're seeing capital flows hit a crescendo in terms of coming out of the country. you're seeing reserves go down. what i talked about yesterday, their debt is twice their gdp. >> what stops our market from reacting the way that it is reacting, moment by moment, day by day basis to what's taking place in china? >> earnings and guidance. and also, keep in mind, tomorrow we have the labor report. what do we want to happen
tomorrow for the labor report? do we want a weak labor report so we can take the four rate hikes off the table? do we want a strong labor report so we can see the economy is accelerated and the dollar will rally? we don't know what we want. that creates an environment of uncertainty. so there's nothing out there right now to answer your question that acts as a catalyst. you have to hear domestic companies talking about what the earnings are and what's the guidance. >> so, josh, china now halts the circuit breaker mechanism. who knows how that market is going to open when it does overnight for us here. when are we going to stop reacting to what's happening in the chinese stock market? >> that's a good question. and actually, the irony is that china put these circuit breakers in place to prevent market panics, but they're actually causing them. and you saw a lift in global markets the moment chinese securities officials said okay, we're done with the circuit breakers. so actually removing them was the real circuit breaker. but this is not really just a china thing. and i've been saying this for a long time. when you think about the amount of the chinese stock market
that's owned by offshore investors, it's 2%. so put another way, 98% of the china market is owned by chinese investors, and i agree with steve. it's a very immature market. only about 25 years in existence. there are 99 million investors and none of them have more than a decade's experience. it's non-institutional like europe, like here. in the u.s., we have other issues. we're probably in the midst of a cyclical bear market, as we speak. doesn't mean we have to have a recession. doesn't mean we have to crash. take a look at the russell 2000. it's 17% off its highs. it broke the september lows from this morning and it's actually trading exactly where it was in september 2013. to have that many stocks on the verge of a bear market -- >> well, the average stock is in a bear market. >> but still, there is a belief on the street. and you've heard it on this network today, that no, this is not the start of a bear market. this is august redux. and we're going to have a
sizable bounce off of this and china's going to subside and the earnings are going to be better than people think. maybe the economy here is going to support that. and it's not going to be as bad as people think. >> what do financials have to do with the chinese economy, the decline in china? why do financials -- why are they down so much? >> why is the biotech index down 11% year to date? this is a little bit beyond what's going on in china. people need to come to terms with that. >> kathy lien, who joins us from new york. do you want to explain why you think the chinese are doing what they're doing with their currency and why it's having such a dramatically negative impact, certainly from a sentiment standpoint here? >> certainly. i agree that chinese markets are relatively new, but i think that china knows exactly what they're doing with the currency. depreciation is a policy tool for the chinese. they're realizing it's hitting the brakes faster than they anticipated, so they felt like
they needed to respond with more depreciation in the u.n. but the intervention that we saw from the chinese that confused a lot of traders overnight is not news. this is a very familiar tactic they took in august, where they devalued the yen, and shortly thereafter, they ordered their state banks to buy the currency in order to drive out speculators. speculation is a problem. what is surprising is that all of the moves are front loaded. but i think this is part of their tactic. this is only the first of their five-year plan to rebalance their economy from export-driven to consumption driven. they need to stem the slide. so i think this is part of their process. >> kathy, i appreciate you joining us today. let's bring in mark fauber, the publisher of the gloom, doom and boom report. welcome back. >> thank you very much. >> what's your read on the markets, not only in china, but here in the u.s. and how they're reacting? >> well, basically, as someone just said, most stocks are down
substantially and have been in bear markets. i think as of today's opening, the markets became extremely oversold, and this was probably the low for the month. in other words, i think we can have a recovery rally. but as i pointed out before, between 2,050 and 2,134 on the s&p, there is huge oversupply. in other words, there is resistance. and stocks are unlikely to make new eyes this year. i think we are going to go lower. has nothing to do at all with china. why are home building shares in the u.s. down 20% to 30%, and no higher than in 2012-2013? has nothing to do with china.
what it has to do with is that the u.s. economy is weakening and weakening much more than is perceived. >> are you saying that we're going to have a recession here in the united states? >> many sectors are already in recession. and what has driven consumption in the u.s. was the active inflation, rising property prices, rising equity prices, rising bond prices. this is no longer happening. for the last 12 months, all active classes have performed poorly with the exception of bitcoin. >> how far do you any the s&p has to fall? >> the peak was 2,134. i would think that most stocks will drop between 20% and 40%.
and that would seem to me to be conservative. >> steve weis? >> the way i look at it is this way. if you ever did come out positive lie like weight watchers, putting a baskin-robbins franchise in their meeting rooms. so i think the upside is going to be greater than just the bounce. i think the housing stocks are a poor indication of that. we've pulled demand forward in housing and autos, but yet we have wage growth that's finally occurring here. we're seeing that. i know you can come back and see the top margins are peaking. i'll give you that. but i see a strengthening economy. it's not 4%. europe, the underlying economies in europe take that out for a second, which is okay. but you take other economies there. you take the mid cap companies. they're actually doing quite well. all the data out of europe in november was very positive. so i don't see it the same as you do. i'm more optimistic. i think china is the problem.
it's isolated. it's emotional. it's sentimental. it's not gone. but it doesn't speak to the vibrancy of our economy and in europe. >> well, you know, different people have different views. and everybody gets the data. and some people have this interpretation of the data and other people have this interpretation of the data. mine interpretation of the data that is coming out is that the economy has been slowing down significantly. the manufacturing sector is in recession. and the service sector, as i said, has been kind of booming because of the trickle down effect from rising asset prices. but that will not continue. so we'll see in six months time who is right. >> if you had your choice -- so if you think the u.s. market is certainly not the place to be, because you expect the s&p to go
down 20% to 40% or most stocks within it to do that, where would you put your money to work? >> well, i think in 2015, cash wasn't such a bad investment. i happen to think that treasuries are not going to make you rich. but compare to german bunds, government bonds having a negative yield and japanese government bonds having a yield of 0.22%. i think treasuries are reasonably accepted, especially when the talk is about eventually introducing negative interest rates. >> mr. faber, i appreciate it.
we'll talk to you soon. >> thank you very much. we will talk again in six months time. >> marc, i actually do love your work and love reading your stuff. >> thank you. >> mr. faber, mark it on the calendar. we'll call you again in six months. >> okay. bye-bye. >> i think, look, earnings are going to be really, really important. we're in this dull period where we're waiting for a couple weeks. you've got all this news going on internationally. people are kind of waiting thinking january is going to be a quiet period. but i do think what's going to be really driving our market is what are companies going to say? oil is at 30 bucks. the consumer has a lot of money right now. they're going to be a little uncertain given all this volatility. but those are positives in terms of you've got more money in the consumer pockets. companies are going to be lapping comparatives. i think it's going to be better than what people expect. >>. coming up, all out of love with apple. tony sakanagi has this to say about the tech giant here back in october. >> i think it's a different kind
of company. i think its best days are behind it. >> since then, apple down 14%. find out if he thinks the stock is a buy at $98 and change. plus, trade school amid the turmoil. our experts tell you the one real thing retail investors should do with their portfolios today. as we head to break, a look at the sector heat map. you're watching cnbc, first in business worldwide.
welcome back. facebook, amazon, net fliflix a google seeing a rough start to 2016. amazon tracking for its sixth straight day of losses, down by about 8% year to date, and that's just in the first few trading days. facebook and google's alphabets, google also weighing on the nasdaq today. both off by about 3% or so. but there is one big exception. that's netflix. up about 3% this year. the only member of the fang gang, so to speak, that's trading positively in today's stock. back over to you. >> dom, thanks. the question really is whether the fangs are getting a little dull. >> i think you've got to watch. we like google. we like facebook. i think they have real earnings power behind them. >> what about netflix? the last two days of netflix have been remarkable really.
>> netflix and amazon are very momentum plays. netflix, they're getting back in there. had some good numbers maybe for the next quarter. but very hard to own them in 100 times earnings. >> that stock continues to have some trouble. it broke below 100 bucks. our next guest has said on this very program that the company's best days were behind it. tony sacconaghi joins us on the phone. tony, thanks for coming to the phone today. appreciate it very much. >> my pleasure, scott. >> what's going on with this stock? >> there's a lot of noise in the supply chain, that iphone units are weak. investors are fearful that numbers have to come down. when a stock like apple, which also has a big consumer momentum following, numbers come down, it's very difficult for the
stock to work. so that's what we're seeing. they're saying i know it calls for 980 in earnings. maybe it will only be $9 next year. we're seeing the stock go down in anticipation of that. >> the other sort of worry i guess you could characterize it at that i hear from investors that i've been speaking with, some of whom love this stock but have since gone short. mention the obvious. the iphone demand coming back. tough comps. the currencies are beginning to lose their luster or are already starting to do that and it's going to have a big impact on asps. those are the prices they're charging for their phones. it could impact margins. it could impact revenues in ways
that people aren't fully recognizing yet. what's your take? >> we believe that the most pronounced impact on currency hedging programs would be on margin. so what happened in fiscal year 2015 was that apple had a $3 billion gain from currency hedges. and many other companies did, too. so obviously, because the dollar was very strong last year, apple collected less revenue as a result and less profit. they offset that with financial hedges that contributed $3 billion. what happened this year in 2016 is that those hedging games, because the dollar has stabilized, will likely not recur. so you still have the impact of a strong dollar, but you don't
really have the offset from currency hedges. >> but we're not talking about an insignificant number. let me also say it's my understanding that apple has been telling investors don't expect the same sorts of benefits that we've been getting from the currency hedges that we've been making. from what i understand, raised prices on the 6s in some of the markets that were being most impacted. were able to renegotiate contracts with some of their suppliers as a result of the currency hedges. but the company in its october 8k, and i have the language in front of me, certainly mentions the potential real impact from the very types of things that we're talking about today, specifically margins on sales of the company's products in foreign countries and on sales of products could be materially adversely affected by foreign currency exchange rate.
>> you've done your homework well, scott. so i think the currency hedging games last year contributed about 170 basis points. so that's what's at risk. i think the debate is whether price increases can help offset that. whether negotiating with suppliers can help offset that. importantly, apple's been making the product for a year. there is some debate in the investment community. it's not as heated as it is around iechbs, around could we see growth margin pressure. if that were to occur, that could be an incremental negative for the stock. >> is that the one thing or one of the key things that would
cause an analyst like you with a rating you have, which i believe has still outperformed, to rethink that? certainly noting that apple's not been caught flat footed by the movement in the currency or the way that it's reacted to it. >> i think that would be bad news for the stock short-term. our belief is -- and our feeling on apple is still quite constructive. because yes, iphones will likely be down year over year and the street is getting increasingly comfortable with that notion. but if we think fundamentally about the iphone business and say is it a healthy business or not, the answer is it is. if we think about the world, there are about five billion out there. there's still a couple billion feature phones out there that will become smart phones. if we look at apple last quarter, it sold 46 million phones on a sell-through basis.
14 million of those were to people who switch from other platforms. another ten million were to first-time smart phone users. people who had a feature phone moved to a smart phone. we don't think the market is saturated. we think apple is still able to gain share from other platforms. we think apple is still able to attract people. so those are positive forces. what we're seeing a very, very tough comparisons that are going to lead to a downturn this year. because the business itself we think is fundamentally healthy. >> made for a bull/bear debate the likes of which we haven't had on this stock in quite a while. i appreciate you coming to the phone. we'll talk to you soon. >> my pleasure, scott. >> first, a break. coming up, transports in trouble. what the bear market in trains, planes, and automobiles says about the broader market. plus, he called the oil drop right here on this show. >> we retest the lows we saw in september of 2008, and the financial crash. i still think we hold at 32 or higher. >> oil hit the lowest level
since 2003 today. find out if tom kloze is sticking with that forecast. that's coming up next. a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card
i'd like everybody's reaction, not only to what apple has been doing, but the kind of conversation and what we were talking about. do you own the stock? >> we used to. we sold it over the last year. and i agree completely. i think the problem with am, it's not a growth stock anymore. so how do you own it as an equity? you have to be at 3%, 4% dividend yield until comps come back down, and it's the law of large numbers. that is the big issue with this company. how do you in five years grow bigger than the market? >> josh? >> i agree with what he's saying. absolutely the shareholder base is going to change here. much more value, much less growth. we don't know what businesses will be in five years from now. ten years ago, this was a computer company that maybe had a shot to do phones. so i'm bullish. i own the name. i would be a buyer here. and i would point out the last time this stock fell out of favor, it found support at the 200-week moving average, which was back in early 2013, and it was a huge bounce from that point.
we're 9% away. >> intraday flash crash low was 92 bucks. i think the close on that is 100 bucks. >> you could see that again. >> yeah, i mean, any stock's got that kind of downside. you talk about 5% downside. look, i'm neither long nor short. i wouldn't be short a company with that much cash. but the way i see it is they come out with new products. i was in the apple store last night. the new ipad, the big one. they tell me it's not really selling. the watch hasn't really sold. i think it's an issue. they get 40% margins on their phones. others don't make money on their phones. so i'm not as optimistic on that. >> at some point, do you think sentiment is just too negative? they've sold a lot of watches, steve, okay? they've sold a lot of watches. >> but it's still a disappointment. if you go to sell five million and you sell only two million, yeah, you sold a lot of watches, two million watches. but it doesn't do anything to bust your opinion. you're still an innovative company. >> in the near term, apple
definitely has potential for further downside. if you don't own apple, you're not rushing to buy it right now. it's also going to be up against very difficult comps. josh mentions where is the business going to be in five years? add on to that, are they going to have the customer base? history suggests yes, apple will have the customer base. so if you currently own the stock, i am not selling the stock. i am staying with the stock, and i am certainly at some point later this year looking to buy the stock because that customer base is not going anywhere, and given all the cash they have, they will deliver a new product to that customer base at some point. >> let's talk about crude oil. certainly something to watch. our next guest predicting the drop in crude, which hit $32 earlier this year. so what now? tom kloza joining us now on the phone. tom, welcome back. >> nice to be back. i was a little worried this morning when i saw 3210 at the
outset. i think it's like a baseball game. and you need to have the closer or the save come in. i'm not sure we have mariano rivera out there with everything that's happening in china, with some of the collateral damage from watching financial markets drop 4%, 5%, 6%, 7% each day. >> so if it's a blown save, how low does it go? >> i think it goes into the 20s. i personally think if we close substantially below, or convincingly below $32, then we're going to test at 25 or $26 number, which looked like an abstraction before. but is probably the look everybody's got to get out. you'll start to see some more cuts in production. you'll see the strippers shut down. i'm talking wells, by the way. and you'll see some other really, really canceled projects that tighten up oils in the second half of the year. >> and we won't comment on the
other business. >> it's a scary market. there's no question about this. because it's not in the hands of the fundamentals. the fundamentals get really poor from day 80 today 110 across the country. you get half a million barrels a day of oil that is in mideastern maintenance right now. and then you have refineries, they'll need about a million barrels a day less oil. i think the market is anticipating what's going to happen 80 or 90 days from now. if it's not, we're going substantially lower. >> i appreciate you coming to the phone. we'll talk to you soon. >> okay, great, guys. >> tom kloza. so josh, what now? >> i don't know. this is pure gut instinct. there's nothing intelligent to be said about the future of oil prices. and i agree with that. i think there's a ton of randomness here. but just generally speaking, when you hear people talking about the marginal cost of production, you should understand that markets tend to go way further through where they should go based on
fundamentals. so if we're saying it's 30, then 20 or 25 sounds more reasonable from a trading perspective. and i would leave my desk right there. >> i just think if you're an investor here, go to companies that have a huge cash balance. because that is going to be key to stick with this if it goes to the 20s. >> 32 bucks. that's what he said. >> 32.10 is the low right now. >> i think if you want to make a trade, look up north. go to canada. look at the energy producers up there. i think that might be a good trade. especially if something happens in the middle east to curtail production. we'll look up north. >> speaking of energy, up with of the best distressed debt investors on wall street will join us tomorrow. that man. marc lasry of avenue capital. he's going to be with us for the hour. we're going to discuss what he calls a once-in-a-lifetime opportunity in the markets. can't wait to hear all about that tomorrow. coming up, bulls versus bears. jeremy siegel confident stocks can rise 10% this year. not everyone is convinced.
dozens of people were killed in northwest libya when a truck bomb exploded, it detonated as recruits were gathering. former aig ceo maurice "hank" greenberg has donated $10 million to right to rise. that's the superpac backing jeb bush. according to "the wall street journal," that donation makes greenberg one of the largest contributors to the november election. the federal government releasing its latest dietary guidelines, and for the first time, suggesting americans limit the amount of daily sugar, which is about 12 teaspoons full for a 2,000 calorie diet. it advised people to cut back on salt and saturated fat, but not necessarily cholesterol. the denver broncos announcing that peyton manning will start in the playoffs. he took over for brock osweiler last sunday and led the broncos to their division-clinching win. it was his first game back since injuring his foot in november.
and that is the cnbc news update for you. back to you. >> you mean you're not supposed to eat that much salt and sugar. >> you're not supposed to eat that much salt and sugar. you're absolutely not. not that most people adhere to that. >> glad we know that now. thank you. >> yeah. uh-huh. >> thanks so much. dom chu has a check on the markets. >> i'm going to cut back on all the butter. the dow industrial is down by about 225 points. it's bad, but it's off the worst level so far today. i want to point out that wal-mart shares are up. one of the two that are in the green so far, up by about 2% here. it is wal-mart's fourth straight day of gains. an interesting start here for one of the dow's laggers. if you move on to the s&p 500 overall, just to give you that broad scope and look here, all of the second dor sectors down. four of the more cyclical exn sectors. the bigger dividend payers are doing well, so again, we'll check out what's going to happen
as we approach the afternoon part of our day, scott. >> dom, thank you. rough start for stocks in 2016. should investors brace for more pain, or is it just a bump in the road? let's bring in jeremy siegel, finance professor at the university of pennsylvania's wharton school. professor, happy new year. good to see you again. >> happy to be here. >> marc faber just told us at the top of our program today, 20% to 40% decline for stocks coming. you agree? >> no. i mean, we would only have that decline if we had a severe recession. i don't see a recession in the cards for the u.s. so -- and i also see the fed being much less aggressive than many people fear. i think one or two hikes is going to be the limit. and outside of the energy sector, we're going to get a very nice bounce on earnings. and i think when we realize that, i still am giving my
colleagcall for a 10%. i may be the last bull standing, but i think that's still very, very possible. >> there's always one. what's happening in the market now? >> well, i think what's going on is the yuan. i mean, the valuation of the chinese currency -- i mean, i think it was a mistake for the imf to add it to the reserve base, when it was still a totally manipulated currency and it still is. china wants -- you know, it's a signal that china is in a slowdown. how low do they want the yuan to go, the rnb. is it seven? is it 7.25? what this does is pushes deflation again on the rest of the world when central bankers are struggling to get inflation up to its targets, and that's one reason why i think it's going to stay the fed's hands when they take a look in march,
which is the first targeted increase, and they don't see inflation anywhere near their target. i think they very well might defer at that meeting. so i think the yuan, i think they need to free it up just like they had those limits on the stock market, which they decided they're going to remove. they need to give a more market price, so we have an idea of where this currency is going. >> who's to say that the fiscal -- the financial issues that are taking place in china don't have a more direct impact on the u.s. economy? seemingly that's all that matters at this point. it's not the direction of the chinese stock market. it's the impact of what's happening in the currency and on the chinese economy washing up on our shores and having us import, if you will, a recession, which our own mike santoli says has never happened before. >> well, i don't understand why we would, you know, import -- we
export very little to china. so if their economy slows down to 2%, which is i guess one of the more bearish calls on china, it really is a drop in the bucket for us. if they devalue the yuan by 10%, we're going to get all the manufacturing goods from china 10% cheaper. that's the deflationary wave. it's going to raise the level of the purchasing powerer of the u.s. >> i don't see how that can transmit itself to a recession in the united states. >> but you've got to race to the bottom in currency wars in china and in the emerging markets, and ripple effects that could potentially deepen in that economy and that of the emerging markets.
how is it possible that all that happens with earnings in the united states don't take a dramatic hit and that has an obvious impact on where stocks should be priced. >> okay, there's two things. currencies are being hit in emerging markets that are exporting oil commodities. mining, etc. that's because prices are going a way down. actually, china, as you know, because it's linked to the dollar and last year the dollar rose by 20%, actually became way out of line with the yen and the euro. a 10% devaluation actually puts them back in the middle of the road. i don't see any sort of race to the bottom. they're trying to realign after a strong dollar. the commodity currencies are going down because commodities are going down, because china is weaker than expected. and they're a major demander of those commodities. but i don't -- you know, none of those factors, i think, is an
outright manipulation that can import to us a recession in the united states. >> professor, i teased we were going to have a debate and i think we did. i appreciate you joining us. >> okay. >> professor jeremy siegel. >> i don't know if we're importing a recession, but i disagree with what he just said. we started expolice reporting deflation back in 2011-2010 with quantitative easing. that's when china began to slow. pull up any gdp chart on china. it didn't happen last year. it happened in 2011-2012. if the chinese are now exporting back their deflation somewhere else, where is it going? it's coming here. can the economy absorb it? we'll see. but importing a recession, possibly. >> i don't think we're close to recession. i agree with this market view, except i'm more in the lower end. but i disagree with what he said in the currency that we have. china is not intentionally manipulating the currency. they want their currency to move
higher. the reason being, they don't want to lose their reserves. and what's happened recently is that every chinese citizen is allowed to convert $50,000 yuan into dollars or any other currency. they did it in december and they're doing it in january. they're worried about something over there. that's why they're doing it. and when china loses those reserves, it's less to prop up the government. >> so when u.s. investors see this all happening, what do you do? >> here's the fear. the deflation hear is companies won't have pricing power. so all of a sudden, yes, your goods are cheaper, but how do you pass that on to the consumer when the consumer now is used to saying why am i paying $10 today when i was paying, you know, $9 yesterday? that is the fear. so you have to find companies and industries that can actually pass on value added services and goods and not just the commodities that are actually being exported. >> joe, what do you do?
>> if you're the federal reserve, you sit on your hands. >> i'm saying if you're a u.s. investor who puts on asia squawk box at night and sees that the market's opening down, and hearing all this stuff about currency devaluations and throwing up their hands, saying i don't know what to do with my stocks here. give me a good idea. >> you have patience. you do exactly what sirat just said. because that's what it's all about. who retains pricing power. does facebook retain pricing power? yeah, it does. there's a lot of other names out there like a facebook, but they're stock specific. amazon. they retain pricing power. even though it's getting slammed at the beginning of the year. who retains pricing power? earnings is going to help you understand that. >> josh? >> we're missing the transmission mechanism. what does that do for risk appetites in the u.s.? that's the actual fear.
whether or not you agree that that's possible, separate discussion. bigger issue, what is my exposure to risk assets given my time horizon, how much money will i need to invest, and can i live with the fact that the reason why stocks offer superior returns, because in the short term, we can have weeks like this. gold climbing to a nine-week high today. i'll give you another shot. we've got a check on the safe haven trades. you're watching cnbc, first in business worldwide. >> the halftime report is the place for market-moving interviews. >> the rates are going up, so the market is adjusting to it. >> real money. >> everyone on the board felt strongly that twitter can be a vibrant independent company. >> real debates. >> the s&p 500 is whistling through the graveyard. >> the most profitable hour of the trading day. >> the price of crude oil would be materially higher than it is now. >> "the halftime report," weekdays at noon eastern.
gold on the move, breaking above $1,100 for the first time today since early november. jackie deangelis at the nymex. hey, jackie. >> good afternoon, scott. yeah, gold seems to be a little bit of a bright spot today. a two-month high, rallying more than 1%. is it fair to say because of the global turmoil that gold has a safe haven status back now? >> well, something interesting has happened this week. monday, the stock market got hammered and people didn't rush
to buy the u.s. dollar like they normally do. today the stock market gets hammered and people aren't rushing to buy the bund or long-term u.s. treasuries as well. so there's something that's dysfunctional. start "x"'ing th off the list, you have to find replacements. i guess the answer is yes probably. >> it sounds like it's a default safe haven trade. >> no doubt. >> jeff kilburg, since we broke through $1,100, what do you think the next level is for gold 124. >> it has been a happy new year for gold. probably one of the few asset classes seeing a near 5% pop. we had a hard time getting above $1,120 but that $1,050 was a great support. jimmy's point, there's a lot of rumors going around in chicago we're seeing foreign sellers of treasuries. it's not really lighting up the safe haven trade. if we get above $1,120 the safe haven trade may come back to life because it's been a long time since we've seen gold act like a safe haven. >> we'll talk more gold on the online show.
and louise yamada will tell us why she thinks we'll see 16,000 on the dow sooner than you want. >> we'll be there. thanks. coming up, three hours left in a volatile trading day already. final trades and some perspective from cnbc's senior markets commentator. mike santoli is next. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
down day, but we're well off the lows as i speak here. it's been a really wild week, folks. so what should an investor do? jim cramer will be on the show to give us his thoughts and the stocks you may want to take a look at. also big cap oil. at what point do these names become a buy? plus janus' bill gross will be joining us with his latest investment outlook. it's a first on "power lunch." make sure you join us starting at the top of the hour for two big hours of "power." over to you, scotty. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan.
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i'm glad you joined us because i loved what you put out earlier, this notion that let all the noise of sort of china get out of the way and let europe close and maybe that's why we've seen a bit of late day nibbling in the market. wonder if he'll continue to see that trend. >> it's been the story for the whole year, right, which is four days. i don't think it's gone unnoticed, which is maybe one reason why our open was much less extreme than we saw overnight. it seems like you're having this capital flight from the rest of the world, selling momentum blog up, it clogoes into the europe close and we have a market not as panicked. you see the vix popping but not to the extent you might think. it does seem there's some money to be put to work. a lot of investors came into this year underweighted the u.s. relative to the rest of the world and with some cash defensively positioned. >> you also think this issue of china and capital flight is one of, if not the most important thing to keep an eye on. >> to me it's the currency a
little more than the erratic action in the shanghai stock market. that's obviously -- the currency is the thing that really says a lot more about policies, says a lot more about trade flows and all the other things that are really going to matter beyond a sort of volatility shock on the equity side. >> last thought, joe, for this day. >> i still think you have to be patient. i think you have to wait. tomorrow's unemployment report is going to be important in terms of what the federal reserve does going forward. >> wonder what happened, steve, now that they have the circuit breaker thing taken off in china, how that market opens overnight and if it's a bloodbath, what it's going to mean for the way that our market the futures trade and how we go tomorrow. >> and i think that's why you're seeing our market continue to trade down to the lows because that's an uncertainty. you don't want to see they're marked down 10%, 14%, 15%. >> i have read some things where there's some hedge fund managers who are going to dump everything. who knows what reality actually plays out. >> yeah. >> josh? >> yeah. i think the important thing to
bear in mind is if we are headed into a cyclical bear market, again, it doesn't mean there's a crash. we're already 8% off the high, so we might have already done a lot of heavy lifting. >> last thought. >> let's find the bottom and then you will get natural buyers. >> good stuff. thank you all for watching. "power" starts now. scott, gentlemen, thank you very much. tyler mathisen here, mandy drury there. there would be the new york stock exchange. another sell-off on wall street, although, mandy, we are well off the session lows. >> yeah, absolutely. the dow, in fact, was down as much as 318 points. currently we're down by 241. we're still, of course, well below the 17,000 mark, but it's all improvement coming off the day's lows that's important here. the s&p 500 is still stuck below 2,000. it is off by about 30 points, and the nasdaq is down by nearly 2% and is actually nearly pretty much wiped out